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Industry Contributor 6 May 2019 - 2 min read

Retailers wary of Facebook’s power

By Paul McIntyre - Executive Editor

Dependency on Facebook is retailers' biggest worry. The flip side is that the platform shifts goods where others fail to deliver (Digiday).

Key points:

  • Facebook works, particularly for older customers (boomers)
  • But customer acquisition costs highly unpredictable
  • New Instagram in-app shopping function could solve lack of conversion, but retailers wary of handing over conversions
  • Pinterest needs to up conversion to justify spend; execs keener on TV and out of home
  • Direct-to-consumer brands diversifying channel mix
  • "Control is being taken away as platforms flex their muscles – we're seeing less control over our target audience, meaning it's becoming increasingly harder to reach a core audience. At the same time, CPMs and costs are rising." - Retailer

Facebook's effectiveness for retailers hunting baby boomers poses a major dilemma – and not just to retailers. Brands are at the mercy of walled garden keepers – who have built higher walls since GDPR regulations kicked in. All marketers are grappling with the same paradox, as are publishers. They need Facebook's unparalleled reach, yet the more data and process they hand over, the greater their exposure to risk, and the more powerful the platforms become. Unwinding the marketing plans that created this vicious circle is no mean feat, even for those with the stomach to wrest back control. But that's part of what Publicis hopes to convince brands it can deliver with its acquisition of Epsilon – if it can scale the U.S. focused customer experience management platform globally.

Implicit in the statement that Facebook works particularly well for the middle aged and elderly is its reduced efficacy for younger shoppers. As Facebook skews older, that poses an audience challenge for marketers – and an opportunity for channels that can better drive the under 55s into digital and physical stores.

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Paul McIntyre

Executive Editor

Market Voice

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